The Florida House today voted to repeal Florida’s Motor Vehicle No-Fault Law and the PIP insurance requirement, passing HB 19 by a vote of 88 to 15. The bill, filed by Rep. Erin Grall (R-Vero beach), replaces the existing No-Fault/PIP system with a new, fault-based system that requires every motorist to buy bodily injury coverage of $25,000 per individual and $50,000 per accident. This insurance will cover third parties who are injured as the result of the negligence of the insured.

“Today, there’s a perverse incentive for third-party claimants to ‘set up’ the insurer of the person who is responsible for an injury or death arising out of a car crash, to recover extra-contractual damages – payments above the policy coverage amount,” said Michael Carlson, president of the Personal Insurance Federation of Florida (PIFF). “The goal of the claimant is to legally ignore the terms of the policy of insurance and obtain a higher judgment, which in turns increases the cost of insurance for all Floridians.”

PIFF said it urges lawmakers to include third-party “bad faith” reform in any repeal of the current system and weigh very carefully how moving to a new system will impact consumers. Without meaningful third-party “bad faith” reform, the new system could create new opportunities for claimants to abuse the current system, resulting in potentially higher BI claims settlements, which increase the cost of insurance.

A study by the Insurance Research Council found third-party “bad faith” lawsuits added $813 million in excess bodily injury claims costs in 2013. These litigation costs are then paid by all Florida drivers and — PIFF explains — must be addressed by legislators if they truly want to bring auto insurance costs down and create more choices and competition in the marketplace for Floridians.

As the debate on repealing PIP unfolds, the Personal Insurance Federation of Florida said it is committed to working closely with legislators to ensure that Florida’s motorists receive the best coverage at the best prices possible, while avoiding unnecessary mandated coverages and litigation costs. PIFF cautions the House to closely review what the Florida Senate might return in the coming weeks and urges the Legislature to include “bad faith” reform to lower the costs of insurance for all Floridians.